A brief recap to note some notable events: Russia invades Ukraine, the FED (and other central banks) began their fight against inflation (which peaked at 9.1% annually in 2022) by raising interest rates, China’s sporadic lockdowns strained global supply chains and oil prices (WTI crude) topped out at $119 a barrel.
Equities rallied on the back of softening inflation data and a “Fed pause” mentality in November. The Federal Reserve reiterated its commitment to combat inflation but pivoted to a tone hinting at the potential for a slowing pace of hikes in 2023.
As decisively as markets closed down in September, they rebounded in October with equal gusto.
After a strong July rally, in fact the 17th best month for US stocks ever since 1950, stocks have since given back all their gains. What has been exceptionally unique this year has been the high correlation between bonds and stocks.
On August 26th, Jerome Powell spoke at the annual Jackson Hole Symposium. His speech, though short (only about 8 minutes), was very concise and a direct indication of the path the FED is willing to take to address inflation. “We are moving our policy stance purposefully to a level that will be sufficiently restrictive to return inflation to 2%.”
July provided a solid reprieve after a difficult first half of 2022, with investors buying the dip. The S&P 500 Index posting its strongest return since November 2020, up 9.2%.
U.S. Capital Wealth Advisors Form CRS